SHIPOWNERS’ MUTUAL PROTECTION & INDEMNITY ASSOCIATION (LUXEMBOURG) v CONTAINERSHIPS DENIZCILIK NAKLIYAT VE TICARET AS (2016)

INSURANCE – CIVIL PROCEDURE – SHIPPING

ANTI-SUIT INJUNCTIONS : MARINE CARGO INSURANCE : PROTECTION AND INDEMNITY CLUBS : SERVICE OUT OF JURISDICTION : TIME CHARTERS

The court maintained an anti-suit injunction restraining proceedings brought in Turkey against a Protection and Indemnity Club by a charterer pursuant to a right of direct action conferred by Turkish Law. The charterer’s rights in Turkish law were circumscribed by the contract between the club and the shipowner and it was only by way of injunction that the charterer could be required to recognise the club’s contractual right to have the dispute referred to London arbitration.
The appellant charterer appealed against a decision ([2015] EWHC 258 (Comm), [2015] 1 All E.R. (Comm) 966) continuing an anti-suit injunction restraining Turkish proceedings it had brought against the respondent Protection and Indemnity Club.

The proceedings concerned a vessel owned by a member of the club. The vessel had run aground while carrying cargo pursuant to bills of lading issued by the charterer. The owner was insured against third party claims pursuant to the terms of its club cover. Those terms provided for London arbitration, and for the club only to be liable if the owner had paid the claims against it. The charterer began proceedings in Turkey to attach the club’s assets as security pursuant to the Turkish Insurance Contract Law 2012 which gave the charterer a right of direct action against the club. The judge found that the direct action conferred by Turkish law was a right to enforce the contract between the club and its member, rather than an independent right of recovery. He found that the injunction should be continued on the basis that the Turkish proceedings were vexatious and oppressive because they violated the club’s contractual right to a London arbitration. 

The issues were whether (i) the right the charterer sought to enforce against the club was, in substance, contractual in nature or an independent right created by Turkish legislation (and thus governed by Turkish law); (ii) if the right was contractual, the club was entitled to the injunction to restrain the Turkish proceedings.

HELD: (1) The judge had made findings of fact in relation to Turkish law from which it would not be right to depart. Those findings showed that the nature of the charterer’s rights in Turkish law were to a large extent circumscribed by the contractual provisions between the club and its member. The charterer was therefore exercising an essentially contractual right and, in accordance with the contract terms, it was bound to accept that its claim was governed by English law and must be arbitrated in London. The charterer’s proposed Turkish proceedings would be a contravention of that obligation (see paras 14-21 of judgment).

(2) The question was therefore whether the club was entitled to an injunction. If the charterer had been a party to the contract with the club, but proposed to institute proceedings in a foreign court, there would be no doubt that it would be restrained from doing so by the grant of an injunction, unless there was good reason not to grant it, in accordance with the principles in Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd’s Rep. 87. It was the charterer’s submission that The Angelic Grace principle did not apply, as it was not a party to the contract that contained the arbitration clause and thus an injunction could only be granted if the foreign proceedings were vexatious and oppressive. The cases of Schiffahrtsgesellschaft Detlev von Appen GmbH v Voest Alpine Intertrading GmbH (The Jay Bola) [1997] 2 Lloyd’s Rep. 279 and Charterers’ Mutual Assurance Association v British and Foreign Marine Insurance Co Ltd had concluded that the principles of The Angelic Grace applied by parity of reasoning when a third party was obliged to comply with an arbitration clause even though he was not a party to the arbitration agreement. Those cases conflicted with the reasoning in Through Transport Mutual Insurance Association (Eurasia) Ltd v New India Assurance Co Ltd (The Hari Bhum) (No.1) [2004] EWCA Civ 1598, [2005] 1 All E.R. (Comm) 715. The court had little hesitation in preferring the reasoning in The Jay Bola and The Charterers’ to that in The Hari Bhum. It was only by way of equity intervening by an injunction to restrain the Turkish proceedings that the charterer in the present case could be required to recognise the club’s right to have the dispute referred to arbitration. As a matter of principle, the right approach was to apply The Angelic Grace and ask whether there were good reasons why an injunction should not be granted. There was no need for the club to show vexatious or oppressive conduct. In the instant case there was no good reason why an injunction should not be granted. There was no question of delay or any inequitable conduct on the part of the club and the injunction should therefore be maintained, The Angelic Grace, The Jay Bola and The Charterers’ applied and The Hari Bhum not followed (paras 22- 35).

Appeal dismissed.

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